Credit Crisis Steals Christmas

Holiday sales likely to decline as consumers cut back.

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Retail sales are almost certain to be so-so this Christmas as families cut back in the aftermath of Wall Street's troubles.

The National Retail Federation, a trade organization based in Washington, DC, expects retail sales in November and December to increase 2.2% this year, to $470.4 billion. That would be the smallest gain since 2002, when sales grew 1.3%.

TNS Retail Forward, a market-research firm based in Columbus, Ohio, expects retail sales to grow 1.5% in the fourth quarter, down from modest third-quarter growth as the boost from tax rebates runs out. Consumer spending represents about 70% of the nation's GDP.

Retailers are betting that value means low prices for most items, with many families budgeting for at least one big-ticket item - think iPod.

Toymakers are here to take your money. This year's novelty item may be the FurReal Friends' Biscuit My Lovin' Pup, a battery-powered hound that responds to voice commands and can lie down, sit, speak and give you a paw. The critter is available for the low, low price of $195.74 on Amazon.com. Watch the video - and that's about it for the toy's novelty.

Fisher-Price offers Elmo Live, an interactive plush toy. The Sesame Street character can sing, crack jokes and tell stories. It sells for about $59.99.

Hasbro (HAS) offers U-Dance, a similar toy for kids. The motion-based dance game sells for about $74.99 and can be connected to a TV - perhaps tapping into the popularity of reality shows. Attach the wireless foot tags to your kid's feet and footprints appear on your TV screen, mirroring every dance step.

For kids aged 4 to 8, the Tag Reading System by LeapFrog Enterprises (LF) is a good way to introduce your child to books. Prices start at about $49.95

MagNext by Mega Brands offers rocket launchers, inventive saber-tooth tigers, woolly mammoths and other hands-on toys designed to engage your kid's imagination. The toys fit into a budget, ranging in price from under $10 to about $90.

If you're on a tight budget, take a look at Spin Master's Bakugan, a toy that can fit in a child's hand and transforms into an action figure. Prices start at about $4.99.

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